PRELIMINARY results FOR THE YEAR ENDED
31 MARCH 2010
FINANCIAL REVIEW
—
GROWING MENSWEAR
—
STRATEGIC update
RETAIL-LED GROWTHUNDER-PENETRATED MARKETS
—
QUESTIONS
3
INTRODUCTION
• RECORD PROFITS– Adjusted PBT of £215m, up 23%– Inventory down 36%– £262m cash at year end– Dividend up 17%
• CONSISTENT EXECUTION OF STRATEGIES IN 2009/10– Digital initiatives– Runway show back to London– Burberry Brit relabelling– Purified brand– Cost efficiency programme
• REASSERT GROWTH AGENDA IN 2010/11– Real estate– Start-up regions– Digital initiatives– Product and corporate initiatives
• WHILE FURTHER CORRECTING LEGACY ISSUES
4
TOTAL REVENUE UP 7%
• TOTAL REVENUE UP 1% UNDERLYING– H1 down 5%– H2 up 6%
• RETAIL– 58% of sales– 15% underlying growth
• WHOLESALE– 34% of sales– 15% underlying decline
• LICENSING– 8% of sales– 6% underlying decline, as guided
£1,202m£1,280m£65m
£92m (£74m)(£5m)
FY 2009 EXCHANGERATES
RETAIL WHOLESALE LICENSING FY 2010
REVENUE
5
£749m
£630m
£40m£6m£45m
£28m
FY 2009 EXCHANGERATES
NEW SPACE H1 H2 FY 2010
RETAIL REVENUE UP 15%*
• COMPARABLE STORE SALES UP 7% (H1 UP 2%; H2 UP 10%)
• INCREASED GROSS MARGIN AND AVERAGE SELLING PRICES
• PROVEN INITIATIVES DROVE GROWTH
• OPENED NET– 12 mainline stores– 9 concessions– 9% increase in average space
• OUTLOOK FY 2010/11– Around 10% average space growth
REVENUE
COMPARABLE STORE GROWTH
* UNDERLYING
6
EMBRACING DIGITAL
THE VISION OF CATWALK TO CONSUMER VIA CYBERSPACE HAS BECOME A REALITY And this show may herald a new 21st
century use of the runway
IHT, FEBRUARY 2010
• SOCIAL MEDIA DRIVING AWARENESS AND REACH
• INNOVATION AROUND RUNWAY SHOWS
• E-COMMERCE SALES UP 60%
7
WHOLESALE DOWN 15%*
£434m(£15m)£489m (£58m)£18m
FY 2009 EXCHANGERATES
H1 H2 FY 2010
• IMPROVED PERFORMANCE IN H2 (H1 DOWN 23%; H2 DOWN 6%)
• IMPACTED BY OWN ACTIONS– Closing Thomas Burberry– Closing high margin European specialty
accounts– Global collection up mid-single digits in H2
• INVESTMENT IN SUPPLY CHAIN FACILITATES OUTPERFORMANCE– In-season orders increase– Cancellations decrease
• OUTLOOK H1 2010/11– Up high teens underlying excluding Spain– Up around 10% underlying including Spain
REVENUE
UNDERLYING GROWTH
* UNDERLYING
8
LICENSING DOWN 6%*
• LICENSING UP 18% REPORTED– Benefit from hedged Yen rate at ¥154:£1
(2009: ¥213:£1)
• TWO-THIRDS OF ROYALTY INCOME FROM JAPAN– Weak department store sales– Apparel licence amended– Exited leather goods licence
• GLOBAL LICENCES BROADLY FLAT
• MENSWEAR– Further non-renewals
• OUTLOOK FY 2010/11– Underlying decline of 5-10%– Marginal benefit from Yen hedge rate
FY2009/10 REVENUE
JAPAN APPAREL
MENS
GLOBAL
JAPAN NON-APPAREL
OTHER
* UNDERLYING
9
REVENUE BY REGION
• SPAIN 9% OF SALES– Restructuring underway
• ASIA PACIFIC 24% OF SALES– Hong Kong and Korea strong– China franchise performed well
• EUROPE 35% OF SALES– UK retail strong– Reduced wholesale accounts by about
one-third in last two years
• AMERICAS 27% OF SALES– H2 comp store sales recovered– Americas wholesale under-penetrated,
only 7% of group sales
FY 2009/10 RETAIL/WHOLESALE REVENUE% growth on an underlying basis
EUROPE +3%
SPAIN(29%)
AMERICAS+2%
ASIA PACIFIC+13%
REST OF WORLD+27%
10
REVENUE BY PRODUCT CATEGORY
• NON-APPAREL 36% OF SALES– Now largest product category
• WOMENS AND MENS APPAREL– Grew in retail– Impacted by wholesale destocking– Outerwear about half of sales– Positive reaction to Burberry London/Brit
segmentation
• CHILDRENSWEAR 5% OF SALES– Strengthened team– Relocated to London– Goal is 10% of sales
FY 2009/10 RETAIL/WHOLESALE REVENUE% growth on an underlying basis
NON-APPAREL+10%
WOMENSWEAR(3%)
MENSWEAR(7%)
CHILDRENS37%
11
Stacey cartwright—
Evp, chief financial officer
12
FINANCIAL HIGHLIGHTS
12 MONTHS TO 31 MARCH 2010£M
2009£M CHANGE
REVENUE 1,280 1,202 7%
ADJUSTED PBT* 214.8 174.6 23%
REPORTED PBT 166.0 (16.1) -
ADJUSTED DILUTED EPS* 35.1p 30.2p 16%
DIVIDEND PER SHARE 14.0p 12.0p 17%
NET CASH 262.0 7.6 -
* SEE APPENDIX FOR DEFINITION OF ADJUSTED
13
ADJUSTED OPERATING PROFIT £220M
£180.8m
£219.9m
£16.2m
£31.4m (£8.5m)
FY 2009 EXCHANGE RATES RETAIL/WHOLESALE LICENSING FY 2010
* SEE APPENDIX FOR DEFINITION OF ADJUSTED
ADJUSTED OPERATING PROFIT*
14
LICENSING PROFIT
12 MONTHS TO 31 MARCH 2010£M
2009£M
CHANGE AT CONSTANTCURRENCY
REVENUE 97.5 82.6 (6%)
GROSS MARGIN AT 100% 97.5 82.6 (6%)
OPERATING EXPENSES (15.3) (11.9) (31%)
OPERATING PROFIT 82.2 70.7 (12%)
OPERATING MARGIN 84.3% 85.6%
2010 INCLUDES FX BENEFIT OF £19.7M IN REVENUE AND £0.3M IN OPEX
15
RETAIL/WHOLESALE PROFIT
12 MONTHS TO 31 MARCH 2010£M
2009£M CHANGE
REVENUE 1,182.4 1,118.9
GROSS MARGIN 706.5 583.2
AS % OF REVENUE 59.7% 52.1% 760bp
OPERATING EXPENSES (568.8) (473.1)
AS % OF REVENUE (48.1%) (42.3%) (580bp)
ADJUSTED OPERATING PROFIT 137.7 110.1
AS % OF REVENUE 11.6% 9.8% 180bp
EXCLUDING SPAIN, OPERATING MARGIN IN 2010 WAS 12.7%
16
RETAIL/WHOLESALE GROSS MARGIN UP 760BP
59.7%55.1% 56.9% 58.5%
52.1%
2006 2007 2008 2009 2010
YEAR TO MARCH
• H1 DOWN 30BP; H2 UP 1,400BP
• POSITIVE FACTORS– Higher % of full price sales– Sourcing/efficiency benefits– Wholesale to retail shift– Favourable FX
• OUTLOOK FY 2010/11– More modest increase
RETAIL/WHOLESALE GROSS MARGIN
* 61.0% EXCLUDING SPAIN
*
17
48.1%
42.3%43.6%42.3%40.6%
2006 2007 2008 2009 2010
YEAR TO MARCH
RETAIL/WHOLESALE OPERATING EXPENSES/SALES UP 580BP
RETAIL/WHOLESALE OPERATING EXPENSES/REVENUE
• OPEX/SALES AT 48.1% AS GUIDED
• ABOUT £30M BENEFITS FROM COST EFFICIENCY PROGRAMME
• OFFSET BY– Reinstatement of bonus/share
scheme costs– Negative FX– Shift to retail– Continued investment
• OUTLOOK FY 2010/11– Around 50% of sales
* 48.3% EXCLUDING SPAIN
*
18
SPAIN RESTRUCTURING
• RESTRUCTURING ANNOUNCED FEBRUARY 2010 TO MOVE SPAIN TO GLOBAL BUSINESS MODEL– Global collection from SS11– Cease local collection after AW10– Close Barcelona facility with about 300 redundancies
• RESTRUCTURING CHARGE OF EURO 50-70M– P&L charge of £45m in 2009/10; c.£15m expected in 2010/11– Total cash spend of £6m in 2009/10; c.£30m expected in 2010/11
• TRADING LOSSES– Breakeven on affected sales of £95m in 2009/10 – Loss of around £10m expected on sales of c.£50m in transition year 2010/11– Modest profit on lower sales in 2011/12
19
INCOME STATEMENT
12 MONTHS TO 31 MARCH 2010£M
2009£M
ADJUSTED OPERATING PROFIT 219.9 180.8
NET FINANCE CHARGE (5.1) (6.2)
ADJUSTED PBT 214.8 174.6
EXCEPTIONAL ITEMS (48.8) (190.7)
TAXATION (83.8) 11.0
MINORITY INTERESTS (0.8) (0.9)
ATTRIBUTABLE PROFIT/(LOSS) 81.4 (6.0)
20
TAXATION
12 MONTHS TO 31 MARCH 2010PBT
£M
TAX (CHARGE)/
CREDIT£M
TAX RATE%
ADJUSTED 214.8 (58.8) 27.4%
EXCEPTIONAL ITEMS (48.8) 14.6
DEFERRED TAX WRITE-OFF - (39.6)
REPORTED 166.0 (83.8)
21
CASH FLOW FROM OPERATIONS
12 MONTHS TO 31 MARCH 2010£M
2009£M
ADJUSTED OPERATING PROFIT 219.9 180.8
RESTRUCTURING SPEND (26.7) (15.8)
DEPRECIATION AND AMORTISATION 52.3 45.1
EMPLOYEE SHARE SCHEME COSTS 18.1 4.5
DECREASE IN INVENTORIES 80.3 48.8
DECREASE IN RECEIVABLES 49.4 2.1
INCREASE/(DECREASE) IN PAYABLES 33.9 (36.0)
CASH INFLOW FROM OPERATIONS 427.2 229.5
22
FREE CASH FLOW
12 MONTHS TO 31 MARCH 2010£M
2009£M
CASH INFLOW FROM OPERATIONS 427.2 229.5
CAPITAL EXPENDITURE (69.9) (89.9)
ACQUISITION/JV PAYMENTS 5.4 (0.3)
NET INTEREST PAID (5.0) (5.9)
TAX PAID (51.3) (26.3)
OTHER NON-CASH ITEMS (1.6) 12.6
FREE CASH FLOW 304.8 119.7
23
CAPITAL EXPENDITURE
2008 2009 2010 2011F
£49m
£90m
£70m
£130m
CAPITAL EXPENDITURE
YEAR TO MARCH
NEW STORESREFURBISHMENT DIGITAL/IT HFH
24
TOTAL CASH FLOW
12 MONTHS TO 31 MARCH 2010£M
2009£M
FREE CASH FLOW 304.8 119.7
DIVIDENDS (52.5) (51.7)
OTHER CASH (3.3) 0.5
EXCHANGE DIFFERENCE 5.4 3.3
TOTAL CASH FLOW 254.4 71.8
NET CASH AT 31 MARCH 262.0 7.6
25
OUTLOOK
RETAIL FY 2010/11 average space growth – Up around 10%
WHOLESALE H1 2010/11 at constant currency– Up high teens percentage excluding Spain– Up around 10% including Spain
LICENSING FY 2010/11 at constant currency– Down between 5-10%– Marginal benefit from Yen hedge rate
CAPITAL EXPENDITURE Around £130m
UNDERLYING TAX RATE c.28%
26
27
Andrew maag
28
INTRODUCTION
• FROM LICENSED BUSINESS TO FULLY INTEGRATED TEAM
• BUILDING ON OUR MENSWEAR HERITAGE
• DRIVEN BY EXECUTION OF PROVEN GROUP WIDE STRATEGIES AND INITIATIVES
29
MENSWEARA KEY GROWTH INITIATIVE
£289m£298m
£248m£227m
£206m
2006 2007 2008 2009 2010YEAR TO MARCH
Wholesale
Retail
BY CHANNEL
Europe
Americas
Asia
BY REGION
Rest of World
MENSWEAR REVENUE
GLOBAL COLLECTION SpainSPAIN
30
MENSWEAR PRODUCT MIX
OUTERWEARJERSEYWEARSHIRTSKNITWEARTAILORINGTIESTROUSERS/DENIMOTHER
AW09/SS10 ORDER BOOKS
BURBERRYBRIT
BURBERRYLONDON
PRORSUM
31
EXITING MENSWEAR LICENCES
2
4
8
11
0
2007 2008 2009 2010 2011F
AS AT MARCH
• HISTORICALLY– 11 licences– Outerwear, tailoring and casual– Global and country specific– Confusing mix– Conflicting pricing– Inconsistent quality and distribution
• TODAY A PURE COLLECTION– Exited all licences– Repositioning as modern luxury– Unique strengths– Supported by focused corporate and
marketing resources
NUMBER OF MENSWEAR LICENCES
ExitedEurope shirts
Various tailoringGlobal socks
ExitedGermany outerwear
US shirtsUS underwear
Global ties
ExitedGermany tailoring
US tailoring
ExitedItaly tailoringItaly trousers
32
Growing menswear
ORLANDO BLOOMDANIEL CRAIGRYAN SEACREST
33
• OUTERWEAR OUR CORE
• UNDER-PENETRATED RELATIVE TO WOMENSWEAR– Outerwear is 40% of mens retail sales– Outerwear is 60% of womens retail
sales
• DRIVE PENETRATION– Strong branding platforms– Broadened offer– Product innovation– Marketing
• ORDERS UP 20%*
GROWING OUTERWEAR
* SS10 PLUS AW10 OVER PREVIOUS YEAR
34
GROWING TAILORING
• TAILORING UNDERPINS BURBERRY LONDON– Modern luxury wear to work offer– Anchored by Burberry Beat check
• PARTNER WITH WORLD CLASS VENDORS– Originally Prorsum only– All suits made in Italy
• SMALL BUT FAST GROWING– Orders up nearly 50%*
* SS10 PLUS AW10 OVER PREVIOUS YEAR
35
REPOSITIONING BURBERRY BRIT
• TO BE TOP OF MIND FOR YOUNG LUXURY CUSTOMER– Outerwear– Denim– Sport
• APPLIED PROVEN STRATEGIES– Elevated iconic check
• DENIM IS KEY INITIATIVE– Invested in infrastructure– Currently c.5% of Burberry Brit sales– Goal is 15%
• BURBERRY SPORT GROWING STRONGLY– Leverage media spend on fragrance
launch
36
APPLYING OPERATIONAL EXCELLENCE
• REBUILT ORGANISATION– Integrated team of specialists
• APPLIED GROUP WIDE INITIATIVES– SAP data– Global buy– Improved delivery capabilities– Improved processes to satisfy in-season
orders
37
Build on menswear heritage
—
Purified menswear offer
—
Growth opportunities
Outerwear, tailoring,denim, SPORT
—
Scope to double sales over time
38
39
Angela ahrendts—
chief executive officer
40
LEVERAGING THE FRANCHISE
—
INTENSIFYING NON-APPAREL DEVELOPMENT
—
ACCELERATING RETAIL-LED GROWTH
—
INVESTING IN UNDER-PENETRATED MARKETS
—
PURSUING OPERATIONAL EXCELLENCE
41
OF WHICH, MAINLINE
ACCELERATING RETAIL-LED GROWTH
RETAIL REVENUE
65
131
2006 2010
58%
43%
2006 2010
NUMBER OF DIRECTLY OPERATED STORES
RETAIL AS % OF REVENUE
£749m
£319m
2006 2010YEAR TO MARCH AS AT MARCH YEAR TO MARCH
260
440
42
12
2220
12
20
30
2007 2008 2009 2010 2011F
YEAR TO MARCH
ADDING NEW SPACE
MAINLINE NET OPENINGS
• NEW STORE CAPEX PLANNED UP OVER 50% IN 2010/11
• 20 TO 30 MAINLINE STORES PLANNED– New markets– Clustering in major cities– Trial concepts
• INCREASE AVERAGE SPACE BY 10% PER ANNUM FOR THE NEXT THREE YEARS
• ADDITIONAL CAPITAL VIA FRANCHISE STORES
43
ADDING NEW SPACE
BURBERRY BRIT, 444 MADISON AVENUEION ORCHARD, SINGAPORE
OMOTESANDO, TOKYO CHILDRENSWEAR, DUBAI
44
IMPROVING SALES PRODUCTIVITY
• BURBERRY EXPERIENCE– Near 10% improvement in customer
experience– Developing client services team to look
after VIP customers globally
• INCREASED FREQUENCY OF NEW PRODUCTS TO STORES– April Showers designed in January; in
store three months later– 10-15% contribution to sales
• ACCELERATE STORE RENOVATIONS– About half of portfolio in latest concept– Trebling refurbishment spend in
2010/11 to catch up
45
• SOUTH AND CENTRAL AMERICA– Six people in HQ– First store opened in Brasilia – About four more planned in 2010/11
• INDIA– Nine people in HQ– Three stores currently– Mumbai opening shortly– Increase investment in marketing across
all media
• JAPAN NON-APPAREL JV– Over 30 people in HQ– Two stores and nine concessions today– Up to 10 more planned in 2010/11– Stopped domestic premium handbag
licence
• £5M INCREASE IN START-UP LOSSES PLANNED IN 2010/11
INVESTING IN UNDER-PENETRATED MARKETS
BRASILIA
MUMBAI
46
RECORD PROFITS
—
NET CASH OF £262M
—
DIVIDEND UP 17%
—
REASSERT GROWTH AGENDA IN 2010/2011
—
ACCELERATE INVESTMENT
APPENDIX
48
ADJUSTED PROFIT
“Adjusted” refers to profitability measures (pre and post tax) calculated excluding:1. Restructuring costs of £48.8m in 2010 (2009: £54.9m) relating to the Spanish
restructuring and the Group’s cost efficiency programme.2. Impairment charges of £129.6m in 2009 relating to Spanish goodwill (£116.2m) and
stores (£13.4m).3. Credit of £1.7m in 2009 representing negative goodwill on the formation of the
Burberry Middle East joint venture.4. Impact of deferred tax write-off in 2010 (£39.6m, comprising £27.3m of prior years’
assets and £12.3m of 2009/10 tax losses not recognised) and one-off tax credits in 2009 (£32.6m).
5. Net charge of £7.9m in 2009 relating to the relocation of global headquarters.
Underlying change is calculated at constant exchange ratesCertain financial data within this presentation have been rounded
Certain statements made in this presentation are forward-looking statements. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from any expected future results in forward-looking statements.
This announcement does not constitute an invitation to underwrite, subscribe for or otherwise acquire or dispose of any Burberry Group plc shares. Past performance is not a guide to future performance and persons needing advice should consult an independent financial adviser.
49
RESTATEMENT OF 2009/10 TO EXCLUDE SPAIN
FULL YEAR TO 31 MARCH 2010AS
REPORTED£M
SPAIN*£M
EXCLUDINGSPAIN
£MRETAIL/WHOLESALEREVENUE 1,182.4 94.8 1,087.6
COST OF SALES (475.9) (52.0) (423.9)
GROSS MARGIN 706.5 42.8 663.7
AS % OF REVENUE 59.7% 45.1% 61.0%
OPERATING EXPENSES
AS % OF REVENUE
(568.8)
48.1%
(42.8)
45.1%
(526.0)
48.3%ADJUSTED RETAIL/WHOLESALE OPERATING PROFIT 137.7 0.0 137.7
ADJUSTED OPERATING MARGIN 11.6% - 12.7%
LICENSING PROFIT 82.2 0.0 82.2
ADJUSTED OPERATING PROFIT 219.9 0.0 219.9
* SPAIN REVENUE SPLIT £39M RETAIL, £56M WHOLESALE
50
IR CONTACTS
Kim Warren
Investor Relations Associate
Fay Dodds
Director of Investor Relations
Charlotte Cowley (on maternity leave until July 2010)
Investor Relations Manager
Horseferry House
Horseferry Road
London
SW1P 2AW
Tel: +44 (0)20 3367 3524
www.burberryplc.com
www.burberry.com
www.artofthetrench.com
www.facebook.com/burberry
www.twitter.com/burberry
www.youtube.com/burberry
Richard L Jones
Investor Relations Manager